TCI added to Dutch tax haven blacklist
THE DUTCH government has added the Turks and Caicos Islands and 15 other countries to a tax haven blacklist.
The jurisdictions listed have no corporation tax or a corporation tax rate of less than nine percent, a press release from the Government of the Netherlands stated.
The 16 countries added to the list are in addition to five countries already blacklisted by the European Union – American Samoa, the US Virgin Islands, Guam, Samoa, and Trinidad and Tobago.
UK Caribbean overseas territories Anguilla, the British Virgin Islands and the Cayman Islands were among those added.
Others include the Bahamas, Bermuda, Bahrain, Belize, Guernsey, Isle of Man, Jersey, Kuwait, Qatar, Saudi Arabia, Vanuatu and the United Arab Emirates.
The list was published on December 28 in the Netherland’s Government Gazette.
“By drawing up its own stringent blacklist, the Netherlands is once again showing that it is serious in its fight against tax avoidance,” said State Secretary for Finance Menno Snel. “And that’s just one of the steps we’re taking.”
The list will be used in relation to three measures to combat tax avoidance.
The first is the additional measure on controlled foreign companies announced on the Dutch budget day, which came into effect on January 1.
With this measure the government aims to prevent companies avoiding tax by moving mobile assets to low-tax jurisdictions.
The list will also be used to implement a conditional withholding tax on interest and royalties from January 1, 2021.
This means that companies registered in the jurisdictions on the Dutch list will pay 20.5 percent tax from 2021 on interest and royalties received from the Netherlands.
This will prevent funds being channelled to tax havens through the Netherlands.
Thirdly, the Tax and Customs Administration will no longer issue rulings on transactions with companies headquartered in jurisdictions on the list.
The Dutch list will be updated each year, while the EU list will be updated in the first quarter of 2019.
The Dutch list was subject to a consultation from September 25 to October 22. The consultation resulted in 16 responses, none of which led to the list being amended.
Just last summer, the TCI Government was celebrating when it was not placed on the European Union’s tax haven black list, despite being on the anti-corruption watchdog’s grey list in 2017.
Premier Sharlene Cartwright Robinson in a statement on June 7, credited the territory’s tax transparency, fair taxation and anti-base erosion, and profit shifting measures for preventing the black listing.
The EU process to set up a tax haven black list was triggered by publication of the Panama Papers – documents that showed how wealthy individuals and multinational corporations use offshore schemes to reduce their tax bills.
The TCI was one of eight jurisdictions placed on a grey list, partly as a result of the 2017 storms.
Caribbean islands hit by hurricanes last year were given more time to comply with EU tax transparency standards when the black list was established in December 2017.
The premier along with several senior government officials with private sector partnership engaged the EU Code of Conduct Group in February 2018 in Brussels to start the dialogue and conversation of matters of mutual interest.
The premier said the TCI Government was able to demonstrate to the group significant legal and operational reforms implemented in the area of tax transparency and reporting.
The Chair of the Code of Conduct Group communicated with the premier by email on June 7 that the TCI would not be included in the 2018 List of Non-Cooperative Jurisdictions.